Compensation
Administration
WAGES – paid to BLUE collared; on
daily/weekly/monthly,; can be measured in
terms of money
SALARY – paid to WHITE collared; paid at
specified intervals; paid to employees
whose contribution cannot be measured.
COMPENSATION – comparative form; all
basic, gross amount, allowances and
benefits.
Compensation
•
Remuneration received by
an employee in return for
his/her contribution to the
organization.
Compensation
•
Invariably known as
Employee Remuneration
Also known as “pay”
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Pay is a statement of an
employee’s worth by an employer
and a perception of worth by an
employee.
Compensation
•
Refers to all forms of
financial returns and
tangible benefits that
employees receive in
exchange for their time,
talents, efforts,
performance, and results.
Compensation
•
Assignment
Under Philippine law, wages are
remunerations or earnings for services
rendered. Employers and employees
may agree on rate but should not fall
below the minimum wages set by the
Regional Tripartite Wages and
Productivity Boards (RTWPB) which
has jurisdiction over the place of work.
Compensation Management
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Process of determining costeffective pay structure.
Designed to attract and retain
employees.
Provide an incentive to work hard
Structure pay levels perceived as
fair
Compensation Management
•
System of compensating
individuals for the work they
perform in such a way that the
organization is able to attract,
retain and motivate them to
perform well keeping in view
organizational and market
factors.
Compensation Management
•
As the business environment
becomes increasingly
complex and global, the
challenge to create and
maintain effective
compensation programs,
given cost constraints,
Compensation Management
Cont’n
also requires greater
professional expertise,
organizational
understanding, creativity, and
vision than ever before.
TRENDS
Diversity in Strategies
•
Not too long ago, employees
received a base salary (w/c
organizations described as
COMPETITIVE) and a set of
pre-established benefits (w/c
organizations considered
COMPREHENSIVE).
Diversity in Strategies (cont.)
•
Today, firms are providing
variable pay, special recognition
bonuses, individual and group
incentive plans, and broad-based
success-sharing programs at all
levels in the organization, and
flexible benefits are becoming a
norm.
Soaring Benefits Costs
•
There is general consensus
that the traditional approach
to health care is
“unsustainable”.
Significant Pay Inequity
•
There continues to be
significant pay inequity when
comparing pay at the “top”
and at the “bottom”.
Pay Programs to
Communicate Change
•
Pay programs are increasingly
being used to communicated
major changes in the
organization, particularly
during and after major
downsizing and reengineering
efforts.
Does pay
matter?
•
The amount of pay and the way
it is packaged and delivered to
employees can motivate,
energize, and direct behavior.
•
Compensation plays an
important role in an
organization’s ability to attract
and retain qualified, highperformance workers.
Compensation strategies and
practices can clearly shape the
composition of a workforce.
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Microsoft sets out to hire a certain
percentage of top technical talent that
graduates each year. It invests heavily
in recruiting and selection activities.
It offers job candidates a generous signon bonus, a competitive base salary,
stock options, and a flexible benefits
program, which allows individuals to
select the benefits and coverage that
they both need and value most.
•
The cost of compensation can
influence firm success.
• In 2009, Norway reported
the highest per hour
manufacturing
compensation costs
($53.89), while the
Philippines posted the
lowest ($1.50)
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$1 in 2009 = Php46 (est)
Thus, $53.89 = Php2,478.94
If a worker rendered 8 hours a
day, 5 times a week, the worker
earns an amount of
Php396,630.40 (gross)/ month
or Php4,759,564.80
(gross)/year.
•
5,020 1-pc Chicken Joy Value Meal
•
2,938 Amazing Aloha Value Meal
•
881 bus rides thru Victory (Bag-Mla)
For Effective Compensation
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It enables an organization to
attract and retain qualified,
competent workers.
It motivates employee’s
performance, fosters a feeling
of equity, and provides
direction to their efforts.
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It supports, communicates, and
reinforces an organization’s
culture, values, and
competitive strategy, especially
long-term strategy.
Its cost structure reflects the
organization’s ability to pay.
It complies with government
laws and regulations.